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— Blog

How Cloud Cuts Costs for IT Departments

Okey Keke, Sr. Solution Architect
August 17, 2017

Businesses turn to new technologies for a variety of reasons. Often, the intention is to be on the cutting edge and stay ahead of the competition. In other cases, the pace of change has accelerated so quickly that the business needs to catch up with the rest of their industry. Generally, those costs are seen as investments that are necessary for future growth.

However, cloud services are unique in the way that they enable future growth in numerous ways, but they also have the capacity to help businesses and IT departments cut costs in the short term. Read on to learn how.

As cloud computing has evolved, two major changes have happened for organizations and their IT expenditures. First, the onset of virtualization means that hardware spend have decreased drastically. Second, the proliferation of cloud and interconnection services means that deploying services/applications is easier than ever and organizations don’t have to spend weeks or months ordering and configuring connectivity to access them. Digital Realty’s Service Exchange, powered by Megaport, is an excellent example of these two factors coming together.

This is an evolution that is very much still in progress. But it’s not hard to see that cloud can make a real impact on organizations and their IT departments. Network World reports that from 2013 to 2017, IT capital spending has dropped from 24% of total IT spending to 18%. Organizations that have adopted a platform like Service Exchange know that they can scale connectivity to the cloud as they need them and enable multicloud connecitivty without having to reinvest in hardware.

A comprehensive total cost of ownership analysis shows the impact that cloud can make on a business’ capital expenses. Beyond the cost of the services themselves, this type of analysis goes more in depth to determine the approximate total cost of service and support over the solution’s useful life. Some of the highest costs of operating your own compute and storage solutions are associated with personnel, mitigating the effects of downtime, and especially buying, installing, and maintaining hardware.

According to the CTO of Rackspace Hosting, John Engates, "the bottom line is cloud saves companies money and increases their profits." It’s not always a straightforward calculation of ROI, but most companies understand that cloud adoption is a transformative investment that enables insights that can spur growth and further differentiate businesses from their competitors. For businesses that are not only concerned with their bottom line today, but more importantly in future-proofing their IT strategies, cloud has become a necessity.

If you would like to learn more about how Digital Realty’s cloud and interconnection services can help your business cut costs and future-proof its IT strategy, click here. Digital Realty’s growing data center footprint currently spans 4 continents and 11 countries, and more than 32 of the world’s most active global metro areas.

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